International Remittance Inflows and Household Welfare: Empirical Evidence from Nigeria

Abstract

The contribution of remittances income in mitigating poverty and income inequality in Nigeria has attracted very little attention in general. Very few studies have looked at the quantitative relationship between remittance inflows, poverty and income inequality in Nigeria even though it is now believed that total remittance inflows into Nigeria; exceed Foreign Direct Investments (FDI) and Overseas Development Assistant (ODA). Using poverty and Gini decomposable techniques, the study finds that household poverty declines across all the geopolitical zones, by sex and locality as a result of remittance inflows. For example, with remittances, household poverty falls from 0.35 to 0.30 in the South-South region, 0.27 to 0.22 in the South-East region and 0.43 to 0.36 in the South-West region. Poverty also declines from 0.67 to 0.60 in the North-Central region, 0.72 to 0.66 in the North-East and from 0.71 to 0.66 in the North-West regions. Similarly, in the Gini decomposition; the study finds that increase in remittances reduce income inequality more in urban areas (0.1) than in rural areas (0.02). For example, a 10% increase in remittances other things being equal, is associated with declines in the Gini coefficients of total income inequality of 0.02% in rural area and 0.1% in the urban area.